Centre weighing import duty hike for edible oil to support farmers

India is considering a request by the domestic vegetable oil industry to raise import duties, potentially increasing taxes on another major commodity just after a hike in gold tariffs.

The world’s top edible oil buyer is examining whether higher taxes would help local farmers fetch better prices for their crops, according to a person familiar with the matter. No decision has been taken yet, said the person who asked not to be named as the information is confidential.

The deliberations come as the government steps up efforts to curb foreign-exchange outflows, which have put pressure on the rupee — Asia’s worst-performing currency this year.

Earlier this month, Prime Minister Narendra Modi urged consumers to cut dependence on major imported goods, including vegetable oils, fertilizers, gold and crude oil. India imports about 60% of its edible oil needs.

A food ministry spokesperson didn’t immediately respond to an email seeking comment.

A United Nations gauge of global food-commodity costs climbed last month to the highest level in more than three years as the Middle East conflict disrupts supply chains, driven by higher vegetable oil, meat and cereal prices.

Palm oil, the world’s most-widely used edible oil, has surged around 12% since the war began, as top producers Indonesia and Malaysia ramp up biofuel production to cushion the impact of higher energy costs. However, the South Asian nation’s likely move could weigh on purchases and dampen the rally.

India last year reduced the basic import duty on crude palm, soybean and sunflower oils to 10% from 20% to curb domestic prices and support processors. The government also directed the industry to pass on the benefits of the tax cuts to consumers.